1. DIVORCE IS FINANCIALLY STRESSFUL
Alimony, child support and legal fees can be heavy drains on your resources.
Division of property and debt can also cause financial strain.
2. YOU ARE NOT ALONE
Eight percent of people cite divorce as the reason for money problems and divorce is the second leading cause of accumulating excessive debt.
Talking to others who have been in similar circumstances can provide perspective and help you manage this challenging transition in your life.
3. YOU NEED TO HAVE A PLAN
Having a solid fiscal plan will prepare you to handle financial obligations and prevent bankruptcy. Evaluate your cash flow and determine what it will cost to maintain your lifestyle once your divorce is complete.
Set aside money for expenses that could develop into debt. Include an experienced asset protection attorney and certified financial planner as part of your planning team.
4. A BANKRUPTCY FILING MAY HALT YOUR CASE
Declaring bankruptcy during the divorce process will impact your case. A bankruptcy court may suspend activity in your divorce case. If this happens it will be difficult to get your case moving forward again.
Always consult your divorce attorney before filing a bankruptcy action.
5. GET ORGANIZED
Retain and organize copies of your financial records. This includes tax returns, credit reports and banking records.
Maintain an accurate and consistent spending record so you can challenge any liability for debts incurred by your spouse.
Take an inventory of marital assets including insurance policies, pensions, 401k, IRAs, investments and property.
6. UPDATE RECORDS
These include property deeds, credit cards, bank accounts and wills to reflect your individual ownership separated from your former spouse. Protect your credit rating by closing any joint accounts.
7. YOUR SPOUSE MAY BE THINKING ABOUT BANKRUPTCY
Even if you are not worried about bankruptcy, your spouse may be contemplating bankruptcy as a way to get their financial situation in order.
Therefore, it is important to remain aware of their financial actions until the divorce is completely finalized.
Talk to your lawyer if you think your spouse is going to file for bankruptcy.
8. YOU CAN DIVORCE YOUR SPOUSE BUT NOT YOUR JOINT DEBT
If your spouse files for bankruptcy you may be liable for any debt they incurred while you were married. Your spouse may have their debt discharged through bankruptcy, but creditors can still pursue payment from you.
This can happen even if your divorce settlement divides the debt between you. This financial burden could push you into bankruptcy.
9. THE WORDING OF YOUR DIVORCE SETTLEMENT MATTERS
The way your divorce settlement is worded can affect how a spouse’s debt or bankruptcy will impact you. Any debt obligations you assume as part of your settlement may force you to consider filing for bankruptcy yourself.
If you do file for bankruptcy, creditors may pursue your spouse to pay the debt. If this happens your spouse can take you back to court to recover the expenses.
Therefore, it is important to get good legal advice about the consequences of both accepting and relinquishing your marital debts.
10. MAKE SURE YOUR INTERESTS ARE REPRESENTED
An experienced divorce lawyer can help you with your case.
They can include asset protection and bankruptcy attorneys as part of your legal team. A well versed divorce attorney can also design a divorce settlement that equitably allocates joint debt obligations and includes hold harmless or indemnification clauses.
This will protect your assets and credit as well as prevent bankruptcy when going through a divorce.
Clark, Oxendine and Sauls have over 60 years of legal experience. Their team is ready to help you through this difficult time while protecting your rights and assets.